In This Issue.

* Retail Sales print negative again!
* Currencies around the world rally.
* Oil jumps $2 in price.
* Who's crazy?.

And Now. Today's A Pfennig For Your Thoughts.

Will The Peace Agreement Hold?

Good Day!… And a Happy Friday to one and all! The Friday before a 3-day Holiday Weekend, that also acts as payday Friday! YAHOO! And after a 4 months of having holidays in the months, we now go until Memorial day, before we see another one. UGH!  Which is why I always  found it necessary to take time in March. Of course there are other more compelling reasons why I take time in March, and you being a longtime reader know all about them!  Ahem, pitchers and catchers report in 6 days for my beloved Cardinals.

So. the Big Kahuna data print yesterday, was U.S. Retail Sales. And guess what? Well, the data failed to live up to its pre-print billing.. So, let's get into that first, and then talk about what it did for the currencies.

Well, the U.S. Data Cupboard didn't disappoint yesterday. What it had in it disappointed quite a few, but for us Pfennig readers that follow the BHI.  We knew what to expect! And that was.. A disappointing Retail Sales outcome for January.  Retail Sales printed a negative -.8% in January.  Now. Riddle me this Batman. we've had cheaper gas prices, because of the falling price of Oil for over 6 months now, and all the talk when the price of Oil began to slide was that the U.S. Consumer was going to have more disposable income because they weren't spending it all at the gas pump, and therefore the U.S. economy was going to soar!   Well, why then hasn't that happened? Are consumers, and I can't believe this could be true, paying down debt instead of buying the latest ultra-HD Curved big screen TV? Or maybe paying down past due bills instead of running out to buy the latest figurine chia pet?   Whatever it is. Consumers aren't spending, I mean, didn't we see that with the January Personal Income and Spending data recently?  And if consumers aren't spending, what does that do to the bets that the economy would be soaring by now? Hmmm. makes me scratch my head. But.. if you've got a different idea, then I'm all ears, said the jackass to the mirror..

So. For once in a blue moon, the currencies traded on fundamentals, yeah, don't get your hopes up to high here folks, this was probably a one and done day for the fundamentals returning, but with fundamentals returning and the U.S. printing an awful Retail Sales report, the dollar got sold.  Last night, I checked the currencies and saw that the euro had climbed to 1.14 during the day, and said to myself, “Self, I doubt it will be able to hold on to that figure by the time I turn on the screen tomorrow morning.”   But I was wrong, it took so long, I got caught in the rush hour, fellows started to shower, you with love and affection, look out it's coming in your direction on the expressway.. to your heart!  Geez Louise, Chuck, why don't you just sing the whole song for the dear readers?    But, as I was saying, I was wrong, and instead of giving some its gains back overnight, the euro has added its gains from yesterday in the overnight markets.

The thing that got gave the euro its additional boost this morning was the better than expected Eurozone 4th QTR GDP, which printed, as a whole, at +.3%…  Continuing its week of good news, Germany printed a .8% 4th QTR GDP, which brought up the likes of Italy and Spain, that didn't fare so well.. Now, a .3% GDP in the 4th QTR is not anything to write home about. It's nascent at best, right? But. at least it's heading in the right direction.

So, last night, I couldn't find anything useful to watch on TV, and wind had kicked up outside, cooling things down, from a very warm day, so I pulled up the Bloomberg screens and lo and behold, what to my wondering eye did appear, but an article about silliness.  Yes, silliness, so, here we go. The title of the article read: Juncker and Draghi say EU must safeguard euro from harmful policies.  Are you kidding me?  You mean that they don't believe what they've done to now hasn't hurt the euro?  Negative rates? All-out QE?  What in the heck are they talking about if they don't think those two things were damaging to the euro?  Ahhh. read on Chuck, read on.  What these two European Union leaders, Juncker of the European Commission, and Draghi the head of the ECB, is something I talked about back in 2011, when the debt problems started. A bond union.  you know, a  Eurozone bond.   Shoot Rudy if they had listened to me back in 2011, they would have this all ironed out by now, and there would be none of these problems that are plaguing the euro right now. But they didn't, they won't, and probably never will. So, Mr. Juncker and Mr. Draghi, you had better go back to the drawing board, and try to figure out what you CAN do to keep the euro from being damaged further, from your policies!

With the euro getting a boost yesterday and this morning, the rest of the currencies are free to roam, and for the most part, they are choosing to book gains VS the dollar. The Chinese renminbi was allowed to appreciate by a good margin overnight, the Russian ruble is adding to its rally yesterday, and Gold is stronger this morning too..

The price of Oil jumped $2 yesterday to bring it to a $52 handle. And the petrol currencies took their cue. As I said the ruble is stronger this morning, but too is the Norwegian krone, which had gotten drug through the Swedish krona's mud yesterday, but has recovered now.  It's interesting this morning that the other petrol currencies like Brazilian real, and Mexican pesos, just can't seem to shake the negativity that these two have gathered with regard to each respective currency. This negativity has a strong pull downward for these two, and I have to say that I'm really surprised that they weren't allowed to join the petrol currency rally party.

Well, the peace agreement has lasted 24 hours. I told you yesterday that I had little hope that this peace agreement would be in place very long.  I just don't see it happening.. Especially now that it was announced that the U.S. is sending a battalion to Ukraine to train Ukraine soldiers on how to fight. But no worries, they won't get involved in the fighting, remember no boots on the ground, and all that..  But see what I'm talking about? How can there be peace when there's an antagonist lurking in the shadows?

I only talk about that stuff because the peace would be a good thing not only for the two countries in the conflict but also for the 18 Eurozone countries that have had to suffer through the negative effects of placing sanctions on Russia. That nascent, at best, GDP growth in the Eurozone, would be much stronger if they weren't slowed down by the governor placed on the economy by sanctions. So, hopefully this peace, for a number of reasons I must say, holds.  it would be best for all for that to happen.

Speaking of Ukraine. The IMF has announced an additional $17.5 Billion aid package for Ukraine. the package has not been voted on by the governing council, but Shoot Rudy, I've never seen an aid package that the governing council didn't like to approve, so you can go ahead and add this $17.5 to the amount of aid Ukraine has already received, taking the total aid to $40 Billion.  How, will Ukraine pay this back?  Beats me. And if I were on that governing council, that's the question I would be asking. Instead the IMF likes to hold the loans over a country's head, and then demand they make changes.

Oooooh, I'm very negative this morning toward this stuff with the IMF, peace agreement, and other things in Ukraine. Oh well.. someone has to look at this stuff differently, and as always that someone is me! 

Gold has added a few bucks to its price this morning, same as yesterday morning. Did you hear what a corporate leader-type guy at KITCO told reporters about people who own physical Gold? Now let me remind you that KITCO is a company that deals in precious metals, so what this guy was trying to do is beyond me, so let's just listen to what he had to say that has Chuck so upset.

“A lot of people who buy bits of physical gold aren't looking to make a bracelet or ring. They buy gold because they believe disaster is imminent.

These investors are convinced gold will spike to $10,000 an ounce (it's currently around $1,225) when the U.S. government implodes, said Peter Hug, an executive at metals retailer KITCO.

Hug calls these people “crazies” and says they form a substantial amount of the U.S. physical gold market — at least 25%”

YIKES.. Crazy. that's the number one song that's played on jukeboxes in the U.S. Patsy Cline. the great song was written by Willie Nelson. Bet you didn't know that one!  I used to play a Patsy Cline CD on the trading desk at Mark Twain Bank, and my old colleague, Neil George, loved it when the song, I go walking, would come on.  That's what I think of when I hear the word Crazy, not physical Gold holders!

The U.S. Date Cupboard is empty again today, it needs a day to recover from the awful Retail Sales data it printed yesterday. You know, I can't believe there weren't more news stories about this report yesterday. And the last two reports before this one, with some economic journalist figuring out that Consumer Spending has gone to hell in a hand basket, and then tie it to the other economic reports that have printed very weak or negative, and then write a short white paper showing why the Fed won't hike rates in June.   Look, I just did the draft for you, whomever you are, now it's up to you to fill it all in.. Can you do that?  No? you say here's no future in going against the Gov. or the Fed?  OK. go ahead, go back to your solitaire game on your laptop, and forget all about this. Have a nice day.

HA! That was fun. Eddie Floyd is singing: Knock on Wood. which is what I think I had better do the next time I feel like asking a young economic reporter to write something that might be on the other side of the street from all the lemmings heading to the cliff. I guess I had better knock, knock, knock on wood.

For What it's Worth. Sooner or later love is gonna get ya.. But also, sooner or later, there would be someone with the intestinal fortitude to write about the dollar strength, beside me.  And I found it.I've quoted this guy, Michael Snyder, before, and this article was found here:

“Over the past decade, there has been only one other time when the value of the U.S. dollar has increased by so much in such a short period of time.  That was in mid-2008 – just before the greatest financial crash since the Great Depression.  A surging U.S. dollar also greatly contributed to the Latin American debt crisis of the early 1980s and the Asian financial crisis of 1997.  Today, the globe is more interconnected than ever.  Most global trade is conducted in U.S. dollars, and much of the borrowing done by emerging markets all over the planet is denominated in U.S. dollars.  When the U.S. dollar goes up dramatically, this can put a tremendous amount of financial stress on economies all around the world.  It also has the potential to greatly threaten the stability of the 65 trillion dollars in derivatives that are directly tied to the value of the U.S. dollar.  The global financial system is more vulnerable to currency movements than ever before, and history tells us that when the U.S. dollar soars the global economy tends to experience a contraction.  So the fact that the U.S. dollar has been skyrocketing lately is a very, very bad sign.”

Chuck again. Yes, Mr. Snyder goes on in his article to say that the dollar could very well get even stronger before it gives up and heads back down. so, he's singing from the same song sheet as me, folks. 

To recap. January U.S. Retail Sales printed awful yesterday, and that led to an around the world currency rally. The peace agreement in Ukraine & Russia is still holding, and that has helped the Russian ruble rebound the past two days. Chuck does not have a warm and fuzzy feeling about this peace agreement with an antagonist lurking in the shadows.  Gold is stuck in a tight range, and a KITCO corporate guy, says that 25% of physical Gold holders are crazy. Well, there's somebody that's crazy here, and it's not the physical Gold holders!

Currencies today 2/13/15. American Style: A$ .7730, kiwi .7420, C$ .7980, euro 1.1415, sterling 1.5385, Swiss $1.0760,  . European Style: rand 11.7595, krone 7.5920, SEK 8.4210, forint 268.85, zloty 3.6645, koruna 24.2205, RUB 64.74, yen 119.15, sing 1.3575, HKD 7.7555, INR 62.19, China 6.1288, pesos 14.99, BRL 2.8450, Dollar Index 94.13, Oil $52.07, 10-year 2.00%, Silver $16.93, Platinum $ 1,200.25, Palladium $778.50, and Gold. $1,225.12

That's it for today. It's Friday the 13th. I don't really get into that kind of stuff, but it's still fun to talk about.. Today would have been my older sister's birthday. We lost Brenda when she was only 38, and I find myself thinking about her fight with cancer from time to time, but all it does is put me in a sad mood. So, it's the Friday before a 3-day weekend, and I'm not going to be sad today! The Blues won in Tampa last night. A Convincing win on the road. a good one in my book! It's been a sorry state of Basketball in Missouri this year, with the Tigers, Billikens and even the Bears all having rotten seasons. At least the hockey has been fun to watch this year!   So, will you be going out to buy a new mattress this weekend? Isn't that the traditional President's Day Holiday weekend thing to do? HAHAHAHA!  Eddie Money is singing: Take me home tonight on the iPod right now, love that background singer voice of Ronnie Spector.   And then tomorrow is Valentine's Day!  I hope it's a grand day & night for you and your sweetheart. But in reality, folks, shouldn't every day be Valentine's Day?  If you love someone, tell them every day. it's simple.   And with that, it's time get off this bus today, but not before I tell you to go out and have a Fantastico Friday!

Chuck Butler
Managing Director
EverBank Global Markets